Helium Rising: Private Financing Opportunity
One market I’ve been looking to get a toehold in for some time is helium, which has seen its price rise 3x-10x in the past three years depending on who you talk to.
The market is very opaque, and it's tough to get pricing info.
You may have seen that Party City closed 55 stores in 2019 amid a “global helium shortage”. The company says the shortage was unrelated to their closing, but the media ran with the story line. CBS News ran the headline: “Deflated by helium shortage, Party City to close 45 stores”.
But helium is more than child’s play.
Anything lower than 99.99% is generally referred to as “balloon grade helium”. Higher grades — 99.995% all the way up to 99.999% pure — are used for increasingly high-tech applications.
Helium is used as a push gas in MRIs, for example. It’s also used in cryogenic applications and for pressurization. Fiber optic cables are manufactured inside a pure helium atmosphere. It’s also used to manufacture the semiconductor chips that power all electronics as well as to fill hard drives.
The U.S. once had a very large Federal Helium Reserve. But Congress mandated that it be sold down to three billion cubic feet of gas. That was accomplished in 2018.
And when the government sales stopped... the price of helium skyrocketed, from US$100 per thousand cubic feet (MCF) to US$700+ per MCF . I’ve heard some contracts priced over US$1,000 per MCF.
The wholesale helium market is an oligopoly in which buyers aggressively outbid their competitors. There is no spot market for helium.
There have been a few successful helium stocks in the market.
Desert Mountain (TSX-V: DME)(OTC: DMEHF) went from C$0.15 to C$2.00 last year. Royal Helium (TSX-V: RHC)(OTC: RHCCF) went from C$0.08 to C$0.67.
Neither of those companies have quantified their helium potential yet. And they have had very impressive stock runs.
I’ve helped finance a helium company privately that is soon going public with a founding asset that already has greater than one billion cubic feet of recoverable helium.
With just the first two wells, the project has a net present value of C$32.46 million and an internal rate of return of 412%. And that’s using a conservative helium price of US$375 per thousand cubic feet.
It has a full gas field to expand into from there.
Right now, it is executing the final agreement with an engineering, procurement, and construction (EPC) firm and one of the large gas offtakers. Production testing is expected by June with a helium reserve announcement in Q4. It would be the first in the industry to reach reserve-status for its resource.
It is raising C$7-10 million at C$0.25 as its go-public financing with an expected close later this month. And then it will begin trading in the spring.
I will feature the stock here once it’s public.
Until then, you’ll be able to participate in this pre-IPO round if you’re a member of the Hodge Family Office.
Click here to learn more about that.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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